Posts

Mr Lithium Sees Price Bottoming

/in , /by

THE CONFERENCE CALLER: Lithium prices should start to rebound this year after a dramatic 12 months, according to Global Lithium’s Joe Lowry. By Kristie Batten

Lowry, aka ‘Mr Lithium’, told the Tribeca Future Facing Commodities Conference in Singapore that any market that was expected to grow tenfold over 10 years would experience growing pains and volatility.

“I still believe it is the lithium decade – I absolutely believe that,” he said.

Lithium prices dropped by more than 80% last year and have continued to fall in 2024 – though there has recently been signs of stability.

Both Canaccord Genuity and UBS have called the bottom for prices in recent weeks.

“I’m not going to say it has [bottomed] for sure but I think it’s going to happen this year, if it hasn’t already happened,” Lowry said.

Lowry said the lithium narrative was extremely negative.

“I’ve been in business for 34 years and I’ve never seen sentiment this negative,” he said.

“And it doesn’t make sense because even at US$15,000 a tonne, historically, that’s a pretty high lithium price.”

Lowry admitted that he never expected lithium carbonate equivalent prices to reach US$40,000/t, let alone US$80,000/t.

But he pointed out that there wasn’t one single lithium price.

“The China spot price is not the lithium price. There are a range of lithium prices,” Lowry said.

“So, when you talk about lithium price bottoming, there’s going to be multiple bottoms because there’s multiple prices.”

Lowry said there was a misconception that he was a “wild lithium bull”.

“I think it’s pretty much a balanced market until the end of the decade where I think it’s going to be hard to get to three million tonnes of supply,” he said.

He noted that lithium projects were always late and the current fall in prices had disincentivised new production.

Even the biggest lithium bears at Goldman Sachs had forecast a deficit in 2030.

“I think there’s going to be market tightness and that’s going to put prices back up,” Lowry said.

“The real question is how high will price go? And I believe what the last cycle over the last 18 months has showed us is that there is swing supply, the lepidolite and the grinding up ceramic material and bringing in DSO from Africa.

“If you get if you haven’t another run up above US$40,000, all of that’s going to come back into the market and it’s going to come back in quickly.

“So, I think we have found that there’s a natural cap on a price run. I’m not saying prices will never go to US$80,000 again, but if it goes there it’s not going to be there for very long.”

Lowry said the most transparent reporter of lithium prices was Chilean producer SQM in its quarterly reports.

SQM reported a realised price of US$16 per kilogram of LCE in the December 2023 quarter and Lowry believes for the March quarter, it will be “at least US$16/kg”.

“My point is, if this is the low, it’s three times higher than the last low,” he said.

Canaccord forecasts LCE to average US$16/kg this year, while UBS is at US$15/kg and Macquarie is at US$20/kg.

“All things kind of lead to higher lithium prices – how high they go, I don’t know,” Lowry said.

“My thought is this year the price gets into the low US$20s, probably in Q4.”

Goldman is once again bearish at just US$11/kg.

“I don’t think it’s possible for them to be right,” Lowry said.

Lowry said there was a chance LCE could jump back to US$40,000-50,000/t but he hoped that didn’t happen.

“I’d rather see a stable environment.”

 

ASX Mining Stocks Regaining Momentum: Argonaut

/in , /by

THE CONFERENCE CALLER: The worst is over for mining stocks, according to Argonaut head of research Hayden Bairstow. By Kristie Batten

The year started poorly for equities but Bairstow told the Tribeca Future Facing Commodities Conference in Singapore that green shoots were emerging.

“We are seeing a little bit of a glimmer of hope,” he said.

Of the 50 or so presenting companies at the conference this week, roughly two thirds had experienced share price gains over the past month.

Bairstow said momentum was building and encouragingly, it was across most commodity groups.
“We’re seeing a decent recovery across the board,” he said.

“We are off the bottom and it’s all looking quite positive.”

Lithium was the worst-performing commodity in 2023, but Bairstow believes the price has “probably” bottomed.

Pilbara Minerals and Albemarle Corporation have auctioned lithium cargoes at prices above spot in recent weeks.

“Those sort of negative momentum stories are slowing and in fact, have turned to the positive,” Bairstow said.

Still, share prices of lithium producers had outperformed price.

While prices fell by more than 80% in 2023, Pilbara and Mineral Resources were down by around 20% each since the peak, while IGO and Arcadium Lithium were down 50%.

“The intriguing thing is the market at the big end is happy to look through the lithium price fall and the trough,” Bairstow said.

So far in 2024, the shining lights in the mining market have been uranium and gold.

“In terms of importance in the Australian market, gold really does dominate,” Bairstow said.

The merger of Newcrest Mining and Newmont Corporation late last year pushed the size of the ASX gold space to beyond A$100 billion.

Meanwhile, uranium prices rose to more than US$100 per pound in January, driving a strong performance in equities.

Bairstow said most uranium stocks were up 100-150% over the past 12 months.
“It’s been nothing short of extraordinary,” he said.

 

 

Palladium Making a Comeback: Chalice

/in , /by

THE CONFERENCE CALLER: Chalice Mining managing director Alex Dorsch says palladium is a misunderstood critical mineral. By Kristie Batten

“Palladium is in a very weird position because people perceive it as a metal not needed for the energy transition,” Dorsch told the first day of the Tribeca Future Facing Commodities Conference in Singapore.

The key driver of palladium demand is plug-in hybrid electric vehicles (PHEV) and internal combustion engine vehicles.

Dorsch said consumers were favouring PHEVs over battery electric vehicles due to their lower cost, longer range and the lack of charging infrastructure.

While the sale of EVs in February were down 15% year-on-year, the sale of PHEVs jumped 25%.

“That’s not the narrative the media is telling you right now,” Dorsch said.

“There’s a perception that palladium demand is going to be destroyed by EVs but that is absolutely not true.”

Prices for palladium have been at cyclical lows but are creeping higher.

Palladium supply has been decreasing, while demand remains “robust”.

Chalice estimates about 50% of the global palladium market is underwater at current prices.

In 2022, 78% of global palladium supply came from Russia and South Africa.

Chalice’s proposed Gonneville project would be in the second quartile of global palladium projects on a cost basis.

“We’re going to out-compete South Africa,” Dorsch said.

Gonneville hosts a resource of 16 million ounces of palladium-platinum-gold, as well as 860,000 tonnes of nickel, 520,000t of copper and 83,000t of cobalt.

It is the world’s largest undeveloped palladium resource.

“The Western World has had a capex holiday and a discovery holiday,” Dorsch said.

Chalice is working on a update to its high-grade resource, after which it will update its scoping study.
Earlier this month, Argonaut head of research Hayden Bairstow pointed out that Chalice’s share price had underperformed against the rebounding palladium price.

“We retain our bullish outlook for palladium, with our base case assuming a further 6% in FY25 from current levels and circa 20-30% in the medium-term, with our long-term price US$1300/oz 22% above current spot prices,” he said.

On that basis, Bairstow upgraded his price target for Chalice by 9% to $2.40. Chalice shares closed at $1.03 on Tuesday.

 

 

‘Dangerous’: West Needs to Act on Battery Materials

/in , /by

THE CONFERENCE CALLER: Benchmark Mineral Intelligence’s Henry Sanderson has warned Western nations to stay focused on critical minerals in order to challenge China’s dominance. By Kristie Batten

Sanderson, who is also the author of the book Volt Rush, told the Tribeca Future Facing Commodities Conference in Singapore today that countries including Australia, Canada, Indonesia and Argentina had become very important to the energy transition.

“But at the heart of this transition is China and the US and the relationship between these two superpowers,” he said.

“In many senses, a lot of these other countries are trying to find their place in this new cold war between China and the US.”

Canada has moved to ban Chinese investment in its lithium sector.

“But countries like Indonesia, Argentina, Chile, they’re much more open to Chinese investment and supply,” Sanderson said.

Early days

Sanderson said the energy transition was still in its early stages.

In 2023, battery demand was about 1 terawatt hour but is expected to reach 20Twh by 2050.

“And the implications on raw materials are really quite significant,” Sanderson said.

“With lithium, around 12 million tonnes, up from around 1 million tonnes at the moment.”

Benchmark’s rough calculation is that more than 300 new mines would be needed to meet demand by 2035.

Sanderson said there would be shortages of lithium, nickel and cobalt due to long lead times for mines.

“There’s a fundamental mismatch between the time it takes to develop mines and the other parts of the supply chain,” he said.

“In China, they can build chemical processing cathode and battery cell manufacturing in about a year, so they can really build these plants extremely quickly.

“But it’s the mines that is the sort of limiting factor in terms of the time it takes to develop them.”

‘Hostile world’

Sanderson said China was dominant on the processing side, cathode and anode production and battery cell production, but it was still quite reliant on imports for the raw materials.

“So if you think of China’s perspective, they need to secure these raw materials outside their borders and they face an increasingly hostile world,” he said.

“As I said, Canada has stopped Chinese companies from investing in lithium and we’re probably going to see more of the same, so they need these raw materials to feed the industrial sectors that provide the jobs and economic opportunity in China.

“So that’s why we see Chinese investment in African and Argentinean lithium etc and also the development of domestic lithium within China.

“China is really thinking of energy security, as is Europe and the US.”

On the flipside, Sanderson said where the West was vulnerable was on the processing side and the cathode and anode side.

Sanderson said China had “excessive dominance” in rare earths and graphite.

“China’s dominance is set to remain throughout this decade into the early part of next decade so I think if the West wants to de-risk, it should really focus on these areas where China’s dominance is 90-plus percent,” he said.

US ‘back in the game’

Sanderson said the US Inflation Reduction Act was a significant piece of legislation.

“And what we see in the IRA is very protectionist measures and very, very similar to how China has developed this clean energy industry so it’s like the US is trying to do a China,” he said.

Under the IRA, companies can receive grants or tax if critical minerals are mined or processed in the US.

“Foreign entities of concern cannot be involved in this supply chain – China being the most significant entity of concern,” Sanderson said.

But Sanderson pointed to the fact that Western companies like Albemarle Corporation and Arcadium Lithium could build downstream capacity in China for a 10th of the cost of the US.

“These IRA restrictions are coming in, but the costs are increasing for a lot of projects in the West. So how do we compete with China?”

Sanderson said innovation, hydropower and government subsidies could make the West more competitive.

But he warned it wasn’t as simple as it sounded.

“The Inflation Reduction Act caused a lot of backlash in Europe as a lot of investments that were going to be made in Europe have gone to the US, so there are tensions in this arrangement,” Sanderson said.

“If all these countries get together, there is enough to create new supply chains and really focus on the task.”

Sanderson said when it came to the energy transition, geopolitics was of high concern and were worth following closely.

“Because in Western democracies, we need to get buy-in from populations for this project of de-risking from China and building out the supply chains,” he said.

“Because China is so dominant, we’re already seeing voices coming out against EVs, because they say it will lead us to reliance on China, so we’re in a very dangerous area where, in the West, we need to maintain this vision and this strategy that we’ve embarked on.”

 

 

Singapore Set to Shine

/in , /by

THE CONFERENCE CALLER: You know the world’s collective mining industries are starting to get serious about the inevitable transition to renewable energy generation and storage to offset the impact of climate change when all links of the supply chain gather in one place.

The Future Facing Commodities Conference is a ground-breaking gathering set to take place in the Asian economic stronghold of Singapore in the first week of April.

Future Facing Commodities, also known as critical minerals, are metals and non-metals that have emerged through the unique properties each contributes to modern day technologies.

They each hold particular economic functions due to the fact they are difficult to replicate, and therefore replace, when used in manufacturing renewable energy generators such as solar panels or wind turbines.

Not are they difficult to replicate or replace, some are very difficult to find leading to high degrees of supply risks such as geological scarcity, geopolitical issues, trade policy or other factors, which in turn, makes them extremely valuable.

It has been hard to avoid any chatter of electric vehicle and the predicted global rise they are to be responsible for regarding the increased demand in battery minerals.

This will be a subject of great discussion at the Future Facing Commodities Conference as companies meet to mull over how to meet this demand as the world transitions to renewable energy generation and storage to offset the impact of climate change.

The Future Facing Commodities Conference provides the perfect opportunity to bring together world leaders of Electric Vehicles and the critical minerals industry with global capital markets to meet at one major event in one major city.

An early presentation on Day One will be delivered by BHP Xplor vice president Dr Sonia Scarselli.

BHP Xplor is an initiative by Mining giant BHP, which has opened its doors to aspiring exploration companies, especially those in the hunt for copper, nickel and other critical minerals.

The major’s new BHP Xplor initiative is a simple way for the company to outsource grassroots exploration by financing juniors with a good tale to tell, but nobody to listen.

When launching the program, BHP described Xplor as being, “dedicated to accelerating innovative, early-stage mineral exploration start-ups to find the critical resources necessary to drive the energy transition”.

A smart move to get in early and being in the room should any of these minnows hit something of potential, thereby removing any possible bidding wars with any other super-miner that may be interested.

Also on Day One punters will hear from John Stover portfolio manager for Asia Pacific based investment and advisory firm Tribeca’s Asia Credit Strategy.

Stover’s presentation will look at the Supercyle investment opportunities arising in the Asia-Pacific region.

An appearance from Australian Government Minister Hon Madeleine King, MP Minister for Resources, Minister for Northern Australia will build on presentations at Critical Metals focused conferences by the previous Liberal Government.

No matter who oversees the nation’s capital, all persuasions of Australian governments are realising the importance Future Facing Commodities will play in our immediate future.

The World Bank is just one authority that anticipates demand for critical minerals in renewable and clean energy to increase, citing expectations of a rise of 500 per cent by 2050.

In its Resources and Energy Major Projects Report for December 2022, the Department of Industry, Science and Resources declared critical minerals projects would be perfectly placed to build momentum for Australia’s critical minerals sector.

At the time of releasing the report, Australia’s critical minerals major project pipeline comprised 81 projects with an estimated value of $30 to 42 billion.

Compare this to the same in 2021 when there were 71 projects worth an estimated $22 to 36 billion in the gun and it is obvious this sector is on the rise.

Western Australia has lead the charge to maintain its standing as the nation’s pre-eminent mining destination with over fifty per cent of all Australian critical minerals’ projects — in terms of both project numbers and investment value —located in the state.

That doesn’t mean the rest of the country has given up, on the contrary the hunger for Future Facing Commodities is driving exploration on projects based in most Australian states and territories, with New South Wales, the Northern Territory and Queensland accounting for most of the remaining investment dollars.

“Around a quarter of this year’s critical minerals projects are at the publicly announced stage, worth $6.5 to 11.6 billion,” the Department of Industry, Science and Resources said in its report.

“Projects at the feasibility stage account for more than half of all critical minerals’ projects — worth $16.3 to 22.9 billion.

“A total of 13 projects were at the committed stage ($6.7 billion), and three projects with a capital value of $800 million were completed during the year.”

Although the Future Facing Commodities are being exhumed from WA they are being put to more use on the eastern seaboard.

According to the Clean Energy Council’s Renewable Projects Quarterly Report – Q4 2022 New South Wales contributed the most financially committed generation projects in 2022, with five projects, Victoria came second with four new projects accounting with Queensland completing the podium in in third position.

All up, in 2022, 15 generation projects for a total of 3.57 gigawatts (GW) of installed capacity reached Financial Close, which was down on 2021’s total of 23 projects.

The Clean Energy Council noted that a pattern seems to be developing where there are fewer total projects, however, those that are coming on board are larger in size in terms of installed capacity.

“In 2022, 26 projects across Australia reached financial commitment. This was seven projects fewer than 2021 and the lowest annual tally of new projects reaching this stage since the Clean Energy Council began recording data in 2017.

This equates to 13.7 GW of installed capacity, as well as 10.1 GWh of storage,” The Clean Energy Council said.

“Over this same period, 189 generation and storage projects have been commissioned, contributing 13.9 GW of installed capacity, and 1.1 GWh of storage.”

Despite these figures, the hunger for investment in renewable energy and storage goes unsated with investment in new financially committed capacity projects hitting $4.29 billion in Q4 2022, a 10-fold increase to the previous quarter, and more than $4.1 billion compared to 12 months previous.

“The rolling 12-month quarterly average investment spiked to $1.56 billion for new capacity projects, and huge increase from the $531 million seen in Q3,” The Council added.

“Total investment on new financially committed capacity projects for 2022 reached $6.24 billion, an increase of $0.99 billion (+18.9 per cent) compared to 2021.”